MCG Capital Corporation (MCGC)

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MCG Capital cuts 42% of staff, net loss balloons

Washington Business Journal - by Tucker Echols
Date: Thursday, August 4, 2011, 11:16am EDT


MCGC said Thursday that it would reduce its workforce by 42 percent in a bid to save as much as $7.25 million by the end of 2012. The company’s quarterly loss soared tenfold in the latest quarter.

MCG, which makes loans and investments in small and medium-sized private companies, said it would lay off 22 current employees and eliminate the positions of five other employees already terminated as part of a restructuring to better serve future plans to invest more in debt. The reductions will leave it with a staff of 36 employees.

Total cost of the restructuring is expected to be approximately $4.3 million to $4.5 million. The company said those costs would be incurred during the remainder of fiscal 2011.

In the fiscal 2011 second quarter, ended June 30, 2011, MCG reported a net loss of $10.2 million, or 13 cents per share. That compares with a net loss of $800,000, or 1 cent per share, in the year-ago period.

Net investment loss for the quarter was $21.4 million due primarily to a $24.8 million reduction in the fair value of the company's investment in Broadview Networks Holdings Inc.

Revenue for MCG fell 2.6 percent to $21.2 million.

Investor reaction to the layoff and latest results was not positive. Stock in MCG (NASDAQ: MCGC) fell Thursday as much as 97 cents, 17 percent, to $4.55 — a 14-month low. MCG went public in 2001 at $17 a share.




Dividend sure does not look safe.